[Verse 1] Balance sheet tells the story of where you stand Assets equal liabilities plus equity's hand Current assets flow while fixed assets stay Property and equipment help you earn each day Cash and inventory, receivables too On the left side showing what belongs to you [Chorus] A-L-E, that's the key Assets equal liabilities plus equity Revenue minus expenses shows your gain Cash flow keeps you running through the rain Read the statements, know the game Financial truth behind the company name [Verse 2] Income statement shows the money that you've earned Revenue recognition rules must be learned Match expenses to the period they belong Accrual accounting keeps the timing strong Cash accounting's simple but it's not complete Profit doesn't always mean cash in your seat [Chorus] A-L-E, that's the key Assets equal liabilities plus equity Revenue minus expenses shows your gain Cash flow keeps you running through the rain Read the statements, know the game Financial truth behind the company name [Verse 3] Cash flow statement breaks it down in three Operating, investing, financing activity Working capital management keeps you alive Current ratio, quick ratio help you survive ROE and ROA measure profitability Debt to equity shows your leverage strategy [Bridge] GAAP and IFRS set the rules we follow Management choices make the numbers hollow Look beyond the surface, read between the lines Footnotes and MD&A reveal the signs Book value differs from the market price Due diligence requires rolling dice twice [Verse 4] DuPont breaks down ROE in parts of three Margin times turnover times leverage degree Activity-based costing allocates with care Direct and indirect costs must find their share Sunk costs are gone, opportunity waits Relevant costs help when making debates [Chorus] A-L-E, that's the key Assets equal liabilities plus equity Revenue minus expenses shows your gain Cash flow keeps you running through the rain Read the statements, know the game Financial truth behind the company name [Outro] From balance sheets to budgets planned Financial knowledge helps you understand The numbers tell a story if you know the way Accounting principles guide you every day
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